3 Ways Retirees Can Stretch Their Social Security Benefits for a Luxurious Lifestyle
Written by
Vance Cariaga
Edited by
Daria Uhlig
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The typical Social Security payment won’t buy much luxury, but if you strategize over how to maximize your benefits, they can, at least, help fund a luxurious lifestyle. The first step is to set your sights on getting more than the average retirement check, which was only $1,866.44 a month as of April 2024, according to the Social Security Administration.
The biggest possible check you can get in 2024 is $4,873 a month, but not many Social Security recipients get that much. To qualify, you must have equaled or exceeded Social Security’s maximum taxable income for at least 35 years of your working life.
The maximum taxable income is the amount of wages on which you pay Social Security taxes, which are deducted from your earnings. In 2024, the maximum taxable income is $168,600 a year. Any earnings above that are not subject to Social Security taxes. The figure is adjusted every year based on shifts in national wage levels.
You also need to wait until age 70 to claim benefits if you want to earn the highest possible check. Age 62 is the earliest you can claim, but your monthly payment goes up the longer you wait. After age 70 there is no more benefit to waiting.
Wait as Long as Possible To Claim
If you want to get the most out of Social Security, don’t claim benefits early. You should wait at least until you reach full retirement age (FRA), which is currently 66 or 67, depending on your birth date. After that, your benefit will rise by 8% a year up to age 70. If you wait until 70, you will increase your total monthly payment by more than three-quarters compared to collecting at age 62.
Choose the Right Spousal Strategy
A spouse’s Social Security benefit — one based on their spouse’s record instead of their own — is directly tied to the payout that the primary beneficiary receives. If your spouse files for benefits at age 62, your spousal benefit will be permanently reduced as well. Another thing to keep in mind is that spouses can’t take advantage of the normal age 70 rule because their payout is capped at 50% of the primary beneficiary’s full retirement benefit. Even if your spouse waits until age 70 to collect Social Security, your maximum benefit remains at 50% of their FRA benefit amount.
Move to a State That Doesn’t Tax Benefits
Some states still impose state income taxes on Social Security checks, and if you live in one of those states, relocating elsewhere can help you maximize your benefits. Here’s where you’ll pay state income taxes on Social Security as of May 2024:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Montana
- New Mexico
- Rhode Island
- Utah
- Vermont
- West Virginia
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